Ready, steady,…go channel! Part 4

July 30, 2008

How will you measure your business?

Selling though a channel fundamentally changes your access to market intelligence. If you are not prepared for it, you will lose visibility of where your products are going, who is buying your products, what are they purchasing, how many and when etc…Channel partners are usually happy to share most of this information with you, provided they are certain it will not be used to play against them. If they don’t trust you, they will share the information after the sale has occurred; if they trust you, they often involve you in the sales process and always inform you of what they are working on. It all comes down to whether your sales commissions are “route-to-market-neutral”, which means that the sales people get a commissions regardless of who invoiced the customer.

  1. Does your distribution contract require POS (Point of Sales) reporting? This is something you can insist on.
  2. Most distributors expect to see their reporting costs paid for (0.5%)
  3. Do you know what reports you need and how often you would like them?
  4. Have you developed or acquired the tools to collect and analyse the information
  5. Have you identified the people who will be responsible for producing the market intelligence?
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Ready, steady,…go channel! Part 3

July 1, 2008

Part 3: How will you roll-out your plan?

Working through a channel doesn’t mean you can just relax and wait for it all to happen. On the contrary, your initial efforts will need to be significant if you want your channel sales to take off.

Build the right team to work with your channel 

  1. Consider recruiting an experienced channel manager rather than promoting one of your direct sales people
  2. If you can afford it, create a channel marketing position
  3. You can adjust your order management team
  4. Channel partners are good at using on-line tools. Are yours ready?

Is your finance organization ready for a different business model?

  1. You will be collecting larger amounts with different payment terms and different payment “habits”. Resellers are often strapped for cash…
  2. You will be paying out money or making credits in the form of Co-op advertising support or Market Development Funds. This doesn’t happen in a direct model
  3. You might need to pay finder fees to people you aren’t actually trading with such as Influencers (this concept is one of the most difficult for financial departments to cope with)

Can your marketing policy and organisation handle the requirements of your channel strategy?

  1. You probably need to re-balance your marketing budget
  2. Your partners will expect support through co-operative and market development funds (Co-op and MDF in channel lingo)
  3. At some point, you will need to build your brand and product awareness in the channel, should you plan a Marcom budget for this?
  4. How will you help your channel promote your products on their web sites?

If you actually ship stuff:

  1. Check your packaging (cartons, cases, pallets, containers, etc…)
  2. Check your part–numbers (UPC codes are sufficient)
  3. Does your price list provide for volume orders?
  4. Are your logistics ready for a change of pace?
  5. Do need the logistics you had up to now?

If you sell software:

 Can your systems report by whom the revenue was generated

If you provide services

Can your channel partners resell them (do they have a part number)?


Ready, steady,…go channel! Part 2

June 26, 2008

Part 2: What is your plan?

 
  

 

 

 

 

Building a channel requires a long term commitment. You need to know where you are starting from and most of all, where you want to go. Pending that, you will be able to prepare for some of the key issues you will need to address on the way. Continuity and consistency are key to a solid relationshipHave you thought through and documented short, medium and long-term plans?   

 

  1. Will you move directly to a full indirect model? (no more end user invoicing).
  2. Do you plan to make that move in the coming years

Is your sales compensation policy compatible with indirect sales model

  1. Your direct sales staff must not lose-out if a customer buys from a channel partner. Otherwise they will play against your channel and your partners will walk away
  2. Your channel partners must not see your direct sales force as the enemy

Have you thought through your total pricing and discount policy

  1. Benchmark it against your competition’s
  2. Do you have a pricing and discount policy that will encourage your new partners to reduce your own costs (that is why you share part of your margin with them)
  3. Build a realistic value proposition that your Account Managers will be able to defend in front of a seasoned reseller principal

“Right-size” your channel recruitment strategy:

  1. Don’t go berserk and recruit every partner you can find
  2. How many partners can you handle, should you recruit a distributor?
  3. Should you recruit one or several distributors?

 


Ready, steady,…go channel! Part 1

June 18, 2008

Can you tick all the boxes before jumping into the channel?

 

In the last 10 years, waning ICT growth in the enterprise segment has forced most actors to re-examine their routes to market in order to make sure their products and services are available where their prospective customers expect to find Preparing to swim the Channel...them and where the real growth is. Without necessarily taking a “bottom-up” approach, the whole ICT industry has come to the conclusion that it would only be able to access certain segments via an indirect channel. This is because average size companies are buying a lot of ICT products and services but they rely on their channel partners to act as an outsourced ICT department. Certain major IT manufacturers have recently made their “coming out”, confirming a strategy they weren’t necessarily admitting to in the recent past.

 

This short series is built from experience and attempts to list a number of areas you need to have thought about before you jump into the channel.

 

Part 1: Do you have a strategy?

For a start-up business, this is a founding decision and you will be building your whole business model on your route to market strategy. But if you are already selling direct, you need to make sure this fundamental move is not going to unbalance your whole business, resulting in a potential collapse of your overall sales and often causing frustration within your own organisation and amongst your newfound partners and existing customers.

 

  • Why are you making this move?
    • Can you give your prospective partners a good reason for the change?
    • Does everyone in the company understand the reasons?
  • What is your vision?
    • Your new partners will be reassured to see that you actually have one
    • Working with partners requires long term investments on both sides
    • If your potential partners don’t trust you they won’t play

 

Coming soon: What is your plan? 


Will Dell’s channel strategy be successful…who gets the last laugh?

February 13, 2008

laughing-hyena.gifThe industry is all excited about Dell’s announced channel strategy. People are questioning whether its a shrewed move…well I think it is!

The fascinating thing as that people missed the signs two years ago. Check this out the article referred to is only 18 months old and the journalist was saying that the attempt was doomed, that Dell would never formalize a channel strategy  because it “owns the customer“.

I believe Dell are right and they will succeed, simply because they recognise that they can’t own all the customers. This is great news for the ICT Channel since it confirms in no uncertain terms that Vendors cannot access certain categories of customers without partnering with the Reseller community. How many predictions have we seen in the last ten years, announcing the end of the Channel, the end of the Distributor, and so on…in fact, what we are seeing is a real coming of age of our industry.

As technologies converge, the Channel is diverging. Today, channel partners have a much more precise understanding of their own business and are more selective when it comes to deciding what products and services they will provide to their customers. The Vendor is now just a supplier amongst others and if his products don’t meet the channel’s customers’ expectations, they will look for something else.

The added value provided by the channel is becoming increasingly important to certain categories of End Users who see their channel partner as an outsourced IT department and this is where Dell needs the channel. And guess what: that market segment is where all the growth is for the years to come.

I happen to know that Dell have done their homework, making sure there will be no conflict between a nascent channel and their existing sales organization. Agreed, they will be circumventing the Distributor, offering a full financing scheme directly to their channel partners, enabling the partners to absorb the complex payment terms imposed by customers in certain countries such as France, Italy, etc…

Dell have a solid range of products and a solid reputation they have built despite the initial criticism. They also have a solid determination: those of you that have been around long enough will remember…everybody laughed when Dell appeared and said they would sell direct!

As the French say: “Rira bien qui rira le dernier!” (The last one to laugh will really laugh)


Why does the Channel think Vendors don’t care?

February 1, 2008

“Everything is just fine!”I just got back from moderating two interesting workshops at DISTREE XXL 2008 in Barcelona, an event where vendors from around the world get to meet distributors from 80 countries.

One of the workshops I ran was a discussion about how an increasing number of vendors, both manfacturers and software vendors are trying to convince their channel partners to sell Services as a Product. As usual, one of the participants was particularly outspoken and had strong opinions on everything, smothering the group with his views. In particular, he seemed convinced that the software publisher (whose name I will withold) represented by a young lady who had flown all the way from the northwest of the USA (get the clue?…) absolutely didn’t care about the channel.

It so happens the reason a significant number of representatives of this vendor were present was precisely to have discussions with as many channel partners as possible to find out how they should develop new Services sold WITH and THROUGH the Channel.

For having spent many years managing Channel operations with major vendors (and many additional years advising vendors on how they can better work with their partners), I know only too well that vendors don’t hate the channel! On the contrary, they seek their feedback, their partnership (and for once, that word really qualifies) to grow business in a mutually beneficial manner.

Pushing Vendors away results in the vendors having to find new solutions and if your Channel doesn’t want to work with you, there aren’t that many other solutions to sell your products to the end user than to go direct or build a new Channel.

At a time when large companies are looking at the financial world melt away like an iceberg (remember…90% is not visible), when emerging markets and countries are going to need to bail us out as we start sinking, vendor survival is becoming increasingly dependant on the Small and Medium Businesses of the world. SME and “Mid Market” businesses rely on their IT Partners, namely the Channel who are in this case their outsourced IT department. Vendors know this only too well and when they tell the Channel they want to work with them, the Channel should listen and not push them away.

Of course, there are clumsy vendors, of course there are stupid territory account managers, but it is too easy and too dangerous to blame a vendor with trying to cheat the channel. Exactly like with the world economy, we are all in the same boat and the channel should not ignore the vendors just because they are big…we all need each other, its called a symbiosis.


Should Carlsberg get a prize for innovative marketing?

December 3, 2007

carlsberg_litter1.jpg

Carlsberg seem to be specializing in alternative marketing. Last August, they littered the streets of London with £5,000 worth of £10 and £20 banknotes with a sticker on them saying “Carlsberg don’t do litter. But if they did it would probably be the best litter in the world“. Click here to check it out!

  • Cost: 400 green stickers, someone to chuck bank notes on the pavement and £5,000 worth of banknotes.
  • Result: certainly hundreds of thousands of people (if not millions) talking about Carlsberg.

The other day, I received a “Gift” from a Facebook pal: it was a picture of a bottle of Carlsberg. Of course, it was posted to my Funwall, and everyone found it great fun and the bottle certainly started circulating at hyper-speed round the Facebook-world.

  • Cost: you name it! one photo, 10 minutes on Photoshop to turn it into just the bottle, AND THAT’S ALL. We all did the rest!
  • Result: …how many people have a Facebook account these days?

Clever!…sounds like beer makes you smarter!